Fundraising in Nonprofits of Color

Conventional fundraising advice doesn’t always work for nonprofits of color.

Almost all research on fundraising is done on mainstream nonprofits, and almost all advice and guides on fundraising are addressed implicitly to mainstream nonprofits. Yet because they have different development trajectories, nonprofits in communities of color often have fundamentally different assets and deficits than mainstream organizations of the same size and age.

For instance, imagine two afterschool tutoring programs, each 15 years old, and each with a budget of $600,000. The mainstream program is likely to have been founded by a group of prominent volunteers, mostly white, mostly upper middle income. Today it gets about 70% of its funding from foundations and 30% from individual donors. From its base of founding volunteer donors, the organization had strong writing skills and connections that positioned them for both grantwriting and fundraising events.

In contrast, a parallel tutoring program in an African American or Latino community, for example, is likely to have been founded by a group of community activists, mostly African American or Latino, mostly middle and lower-middle income. With the same budget as the mainstream program, this program gets 95% of its funding from local government, 4% from fundraising events, and 1% from foundations. Its founders had the political connections and savvy to obtain government funding and as an anchor organization in a low-income community, their continued involvement with broader community affairs continues to support their funding strategy as well.

Conventional fundraising advice — that organizations like these should turn their attention to major donors — is far more doable for the mainstream program than the one based in a community of color. These two programs play different roles in their communities and have different resources they can (and can’t) bring to bear.

Study of fundraising by organizations of color

A study of fundraising in Los Angeles communities of color by CompassPoint Nonprofit Services and GIFT (Grassroots Institute for Fundraising Training) went deeper into these issues. Blue Avocado is grateful to them for letting us excerpt their report:

Like many regions in California, Los Angeles reached a demographic “tipping point” over the past five years: white residents are no longer the majority population. Today, over 60% of Los Angeles residents are people of color.

Nonprofit community organizations that are based in communities of color have also become a significant portion of the nonprofit sector. Often they originate and identify with an ethnic or racial community and are led by members from that community. While there is no current census of these organizations in Los Angeles, a study in San Francisco has estimated that such nonprofits make up at least 15% of San Francisco nonprofits.

Funding profiles

Foundation grantmaking was the most frequently cited form of income, and comprises the largest share of income among the 104 organizations that responded to the survey:

• Most reported foundation funding in the 40 – 65% range

• One third reported having more than 75% of their income from foundations

• 76% receive goverment funding, yet only a fifth of respondents rely on government funding for more than 50% of their income

• Less than 10% reporting having more than 25% of their overall budget coming from individual donors

• Only 5% reported earned income as their major source.

Organizations are not developing strong donor fundraising programs:

• Half reported 5% or less of their overall budget coming from individual donors

• For small organizations with budgets under $250,000 per year, median income from individual donations was 21%, but dropped to 5% for all other budget sizes.

Fundraising capacity

Most organizations conduct their fundraising activities with fewer than 2 staff people who are both likely to have other significant responsibilities (such as executive director or program director).

In terms of board involvement:

• 20% reported that all board members participate in fundraising

• A majority — 53% — reported that less than half of board members participate in fundraising

In addition, volunteers are a frequent source for fundraising. Three quarters of the organizations utilize volunteers to assist or lead fundraising efforts, most frequently special events. Volunteers also conduct foundation development by researching, writing, and reviewing grant proposals.

When asked about building fundraising strength, nonprofits in communities of color saw training and coaching as the preferred capacity-building means. However, a perception exists that the technical assistance and capacity-building field is primarily white and that these fields are not familiar with the characteristics of their communities and organizations. One respondent noted, “Most communities of color do not have access to the wealth and social capital that mainstream trainers assume attendees to have.”

The distinct value of community-based and led nonprofits in communities of color remains: to engage and involve citizens in the betterment and long-term solutions in their communities, to catalyze and develop indigenous leadership, and build the social, cultural and economic resources within communities. In an environment where public funding is highly uncertain, and the trends in foundation and corporate giving are declining over the next few years, nonprofits based in communities of color need and desire assistance that will build their capacity to raise income from all sources well, and to build a broader base of support within their communities.

Read a copy of the full report, Opportunities for Nonprofits Within Los Angeles Communities of Color: Fund Development Strategies and Capacity Building Needs. The report was written by Priscilla Hung, Steve Lew, and Suman Murphy with data support from Thuan Nguyen, and is published here with permission from CompassPoint Nonprofit Services and GIFT. The Fundraising Academy for Communities of Color, which combines an eight-month training program with fundraising coaching and peer support, is a joint project of CompassPoint Nonprofit Services and GIFT, and has worked with more than 100 northern California and 75 southern California nonprofits. This related report was underwritten by The California Endowment.

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Priscilla Hung

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Steve Lew

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Suman Murthy

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